7 Tips to Reduce Car Insurance Premiums
Buying, or owning a car in Hong Kong is not cheap, especially when it comes to car insurance. Regardless of whether you get the mandatory third party insurance, or comprehensive insurance, you are going to face potentially high premiums. Luckily, there are a number of options that can help reduce your overall premiums. Here are seven.
1. Drive carefully
This may seem a bit obvious, but drivers who have clean records will pay lower premiums. In Hong Kong, insurers use a system called NCD, or No Claims Discount, which rewards drivers who have not had an accident or submitted any claims. After one year, a discount of 20% can be applied to the next year’s premium, with 10% being added for each subsequent year with no accidents or claims - up to a maximum of 60%.
By driving carefully, you will see a drastic drop in your insurance over time. While NCD is usually applied on a per-car basis, there are certain insurance plans out there - especially comprehensive ones - that allow you to transfer the discount from one car to another.
2. Drive less
Aside from being better for the environment, driving less and taking other forms of transit like the MTR or bus can be a great way to reduce premiums. That’s because many insurers quote rates based on how much you use your vehicle. If you use it every day, you are at higher risk of having an accident, therefore you will probably pay higher rates.
How exactly does this work? Well, many insurers will ask the average distance you drive your car each day or week. If a certain threshold is crossed, they will usually quote a higher premium because the chances of an accident are higher which means more risk for the insurer. The best thing to do is to talk to your insurance advisor to see if taking other forms of transit on a regular basis e.g. taking the MTR to work, will result in lower premiums.
3. Park somewhere safe
If you have an insurance plan that also covers theft, one way to reduce the premium is to park your car somewhere safe. If you have access to a garage with security features or a security guard, you will usually pay lower premiums than people who park their car on the street or in unmanned lots.
The reason for this is based on risk. If you park your car in a less secure location, there is always a higher risk that it will be stolen or broken into. Therefore, there is a higher chance that insurers will need to pay out which directly results in a higher premium.
4. Pick the right car
As a rule of thumb: If your car is
more valuable, you will pay higher premiums. This is because luxury cars usually cost more to fix after an accident, and can be targets for theft. If you are looking for a car to drive to the office every day, it may be a better idea to consider a cheaper vehicle than that BMW 750 Li.
That being said, not all cheap cars are equal. For example, a car model that is stolen a lot, or has poor security features, will often see higher premiums from the start because it is a more risky vehicle to cover. You may need to shop around a bit before picking a vehicle, so don’t be afraid to talk to your insurance provider and ask them for base premiums based on vehicles you are considering.
5. Learn about your coverage options
Not only are there a number of car insurance providers in Hong Kong, there are also a ton of different plans available. While all of the plans will have the same core coverage elements, many have extra coverage added. Some will have options that may not be necessary to you, yet you are still paying for.
One thing to do is to be 100% clear on what your current insurance policy covers and what isn’t. Review the documentation you have been provided and decide if there are elements or additions you are paying but don’t need. If you can get rid of a few, you should see a premium decrease.
6. Consider increasing your deductible
Another option is to increase the deductible - how much you need to pay before coverage kicks in - on your plan. By doing this, you will see premiums decrease. Take care here however, and don’t go overboard and select a high deductible just to save money on your premium. After all, if you have an accident you will need to pay a certain amount up front which could be an issue at the time.
The key here is to strike a balance between your budget and the risk you are willing to take. If you have a clean driving record and solid job, a higher deductible could be beneficial. On the other hand, if you have a teenager about to start driving, then a higher deductible may not be the best of ideas because the chances of smaller accidents is higher.
7. Work with a car insurance expert
Finally, working with one of the insurance experts at Kwiksure can be a great way to potentially reduce your premiums. By taking the time to get to know you, your driving needs, and your plans, we can help find the best plan for you. Beyond that, we may also be able to suggest alternative options that can help reduce existing plan premiums.
Contact us today to learn more about how we can help.